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New window of opportunity

in real estate
MONDAY NOVEMBER 9 2009

Apartments under construction in Nairobi. Many property experts are sharpening their
skills ahead of the new regulations. Photo/FILE
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By FRANCIS AYIEKO
Kenya’s property market players are positioning themselves for a major
investment window the government is about to open by allowing the floating of
property shares on the stock market.

The EastAfrican has established that a number of valuers and property managers
in major towns like Nairobi are already putting in place, or upgrading, the
necessary infrastructure —office space, equipment and staff.

Yet others are acquiring new skills and developing other necessary tools in
readiness for the launch of new regulations on Real Estate Investment Trusts by
the Capital Markets Authority.

Industry sources say experts are sharpening their skills in key areas like data collection. The returns will mainly be in the form of rental income or capital gains accrued from the real estate investment. Properties acquired by the trust and managed by the company will be listed on the stock exchange. making it possible to channel capital into the real estate sector in a more structured manner. where members of the public wishing to invest in real estate will have the opportunity to buy shares and trade in them. It will allow individual investors to buy and sell shares of properties listed on the bourse in much the same way people trade in stocks and shares of companies listed on the stock exchange. Cap 167. This will be the first time in Kenya that real estate will be “chopped up” into small units for people to trade in. . and mass valuation techniques. analysis and dissemination. and registered with the Capital Markets Authority. portfolio management. The introduction of the rules will result in a liquid property market that is widely accessible to the private investor. will manage the investment schemes acquired by the Trust on behalf of the investors. According to the draft Real Estate Investment Trusts Regulations. The Real Estate Investment Trusts Regulations will open up investment in the capital-intensive large-scale commercial property sector to the general public. incorporated under the Companies Act Cap 486. They will be required to register a real estate investment trust under the Trustee Act. A real estate investment management company. with the Capital Markets Authority. The trust will raise capital from the market and invest it in real estate projects on behalf of shareholders with the aim of providing returns to unit holders. large investors will be allowed to raise money through the capital market.

” Mr Kowuor said the new investment avenue will spur growth and increase the pace of activities in the country’s property market “because. Last month. The Capital Markets Authority told The EastAfrican last week that the draft regulations will be ready soon. the chairman of ISK’s Valuers and Estate Management Surveyors Chapter.” He says professionals will benefit from valuation and management of real estate projects that will be acquired under the new system. among other things. “We are finalising the draft. We hope to have it ready soon. .” said the source. has started sensitising “prospective clients” to the new investment opportunity. “We are creating awareness among members and encouraging them to exploit every opportunity through any possible forum. The industry. rental assessments and viability appraisals. “This is an opportunity that needs to be grabbed by landed professionals.Those wishing to invest in the schemes will require the services of valuers to determine their interest in the investment. it makes real estate more affordable and liquid. property managers will be the ones managing the real estate investment schemes acquired by the Trust on behalf of the investors. the Valuers and Estate Management Surveyors Chapter of the Institution of Surveyors of Kenya organised a seminar to sensitise its members to the opportunities that will come with the introduction of the real estate investment trusts. Valuers will also come in handy when such individuals want to divest from the schemes. There will also be opportunities for consultancy services.” said Collins Kowuor. On the other hand. he added.

Also. “Valuers will still carry out valuations while property managers will still manage properties. “There is a lot going on behind the scenes in subtle and not-so-subtle ways. real estate investment trusts provide great investment opportunities to the investing public. which limits their investment in real estate to not more 30 per cent of the value of the investment portfolio.” he said. It is likely to spur investment in real estate. said that apart from benefiting property professionals. Efforts by the Kenya Real Estate Index Association to develop an Index should also be viewed as an attempt at positioning the players in the industry. The difference will be that the traditional approaches to valuation and property management will not necessarily work in the new environment. He added: “Some players have also been reorganising their management portfolios and structures in preparation. institutional organisations and the government. The release of a property index a while back by a player in the industry should be seen in this light. adding that there is a lot of behind-the-scenes jostling among professionals for the opportunities. it will help pension funds overcome the hurdle placed by the Retirement Benefits Act.” . But he said that property market professionals will have to upgrade their skills if they are to deliver quality services in this area. the managing director of Ark Consultants.” he said.” Mr Okumu said. thus creating the much-needed employment.Reginald Okumu.